Winklevoss twins file for $20 million Bitcoin IPO

Tyler and Cameron Winklevoss, the key backers of Bitcoin, have filed with the US Securities and Exchange Commission (SEC) to set up an exchange – traded fund for the virtual currency to popularize it, and allow it to be traded like stocks or commodities.

The game plan by the twins best known for suing Facebook CEO Mark Zuckerberg involves an
exchange – traded fund that would hold only Bitcoins. Such a fund
will significantly simplify access to Bitcoins – the way
commodity – based funds made investment in precious metals
easier.

The Winklevoss Bitcoin trust wants to sell a million
of Bitcoin shares, where each is valued at 0.20 Bitcoins.

“The trust brings Bitcoin to main street and mainstream
investors to Bitcoin. It eliminates the friction of buying and
reduces the risks associated with storing Bitcoin while offering
similar investment attributes to direct ownership,” as
bitcoin.com quoted Tyler Winklevoss as explaining the motivation
behind going public.

In the filing with the SEC the Winklevoss
twins said that shares in the trust are “designed for
investors seeking a cost-effective and convenient means to gain
exposure to Bitcoins with minimal credit risk”.

At the moment the filing is incomplete, as it doesn’t stipulate
neither the IPO date nor the exchange where the trust wants to be
listed.

Bitcoin has been around since 2009, but got a push in 2011,
when its value grew to $2 per coin. Though Bitcoin can be
exchanged for other currencies and used to pay for goods or
services, it doesn’t exist in a physical form. A network of
users create Bitcoins, or “mine” them, by means of complex
algorithms on a computer. One can buy the currency on
exchanges and through services like BitInstant and Coinbase.
The maximum number of Bitcoins that can be created is limited
to 21 million, while currently the number of coins stands at
about 11 million. The value of Bitcoins is determined by the
value that various market participants place on Bitcoins
through their transactions. Such companies as Western Union,
MoneyGram and eBay’s Paypal have recently become interested
in Bitcoins, saying they were assessing using the currency on
their platforms.

Since the payment systems using virtual currencies are entirely
regulated by its users, with governments having no control over
either the currencies supply nor transactions, they’ve been
blamed for enabling “a broad range of online criminal
activity, including credit card fraud, identity theft, investment
fraud, computer hacking, child pornography, and narcotics
trafficking”.

All the attacks on virtual currencies show a significant level of
risks for the owners of Bitcoin shares. The SEC filing has a
separate 18 page section enumerating “risk factors.” Key
are the heavy presence of speculators and “an uncertain
regulatory landscape”.